Oil export plan in limbo as Tullow threatens to pull out of Turkana oil fields

Tullow Oil has threatened to suspend its operations in Turkana County just a day before a self-imposed deadline for the start of transportation of crude oil to Mombasa for export.

The latest development has set off a chain reaction that will today see the Government announce suspension of the plan.

The Standard has reliably established that for close to a month now, Tullow’s employees have been unable to gain access to two of its sites where 40,000 barrels of oil that form the first batch of crude that is supposed to be transported to Mombasa is stored.

Further, one of the seven companies contracted to upgrade the Kitale-Turkana road, which leads to the oil fields, has suspended works after three of its employees were attacked.

This has added more controversy to what is turning out to be an oil curse for the country even before full exploitation of the sought-after resource.

A source familiar with the goings-on said it was suspected that the banditry against the oil scheme is political and is meant to stall the process by creating fear.

“This thing has been politicised too much that it will be impossible, however much we want to transport even a single barrel of oil unless certain issues are resolved,” said the source.

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In a letter sent to the Kenya Highways Management Authority (KeNHA), which The Standard has seen, Rowla Construction on May 20 said it had discontinued the construction of the road upgrade to the oil fields until the security of its staff was guaranteed.

This was after one of its employees sustained gunshot wounds in the said attack.

“I would like to take this opportunity to inform the parties involved in this activity that we would like to discontinue KeNHA work for the meantime until security is improved or at least brought under control,” said the company.

Prime Fuels Kenya, Multiple Hauliers and Oilfield Movers last month bagged the Sh1.5 billion tender to transport the crude oil to Mombasa under the Early Oil Pilot Scheme (EOPS) and was supposed to start moving the oil last week, but this has not happened. Tullow in a letter sent to the Turkana County Commissioner protested at what it called “economic sabotage”. Its employees have been barred from accessing Nakukulas Tullow Community Resource Centre, Ngamia 3 and Ngamia 8 oil fields.

Ngamia 3 and 8, we have established, have 40,000 barrels of already pumped crude which is stored in tanks awaiting evacuation. They were to form the first batch of Kenya’s oil find to be transported to the Coast on Saturday.

“Further harassment of the company’s workers in the course of their duties is likely to lead to skilled labour shortage and potential slowdown and likely suspension of oil and gas operations in Turkana County,” warned the company.

There is a stand-off between the national and Turkana county government over the sharing of petrodollars that will be earned from the sale of oil, which is now estimated to be at least a billion barrels.

Turkana leaders have been pushing for 10 per cent of the oil share benefit but the Government wants it reduced to 5 per cent. In January, President Uhuru Kenyatta declined to assent to the Petroleum Exploration and Production Bill. Last month, Uganda cited insecurity as the key reason why it snubbed Kenya for Tanzania; choosing the longer Hoima-Tanga route for their oil pipeline instead of the shorter and more economically viable Hoima-Lokichar-Lamu route.

Petroleum Principal Secretary Andrew Kamau said they could not send trucks to the area because it was too risky.

“Everything is ready,” he said. “But we have a few issues with security, which we are sorting out. So it will be difficult for us to give a go-ahead to the trucking companies because we would be risking the lives of the drivers,” he said.